The Benefits of Business Planning in Early Stage Small Enterprises

Abstract

Abstract This article reports on the results of an empirical study into the nature and role of business planning within the new venture. In order to explore the benefits of business planning and compare the experiences of surviving versus failed businesses, the researchers analyzed 327 micro-enterprises that had been launched during the 1997–1999 period. There was no direct association between early stage planning and survival/failure during the company’s first three years. While the learning and efficiency benefits of the business plan were quite high, these benefits were not found to be directly associated with survival or failure. The business plan’s impact, both in terms of helping the entrepreneur learn more about managing his/her business and enabling him/her to organize the business more efficiently was significantly higherwhen the plan (i) incorporated a market research component or (ii) had been prepared with the intent of being used to guide decision-making.